Economist's Insights

ISM Services Survey Softens More than Expected

Jun 5, 2017

The ISM Non-manufacturing index slipped further than expected in May. After rebounding to 57.5 in April, the May index dropped to 56.9 compared with a smaller decline to 57.1 projected by the median Bloomberg economist estimate. The details of the report offered a mixed outlook for a couple of the key underlying indices. New orders dropped 5.5 points to 57.7 after reaching a near 12-year high in April. Business activity weakened, the prices paid index dropped into contraction for the first time since February of last year, and export orders pulled back from a ten-year high. On a positive note, the employment index climbed to its best level since July 2015 and the inventories index matched a 12-month high. As has been the case with the aggregate macro-data, the services survey showed a weaker tone in actual activity, firm labor data, and no significant inflation pressures.